According to its draft ‘White Paper on the Future of European Defence’ obtained by Agence Europe on Wednesday 19 March, the European Commission and the High Representative of the Union are expected to propose measures to deepen the single market for defence, “in particular through greater clarity of public procurement and regulatory simplification and harmonisation”.
According to the document, reducing fragmentation within the single market and intensifying defence production require, among other things, a simpler and more harmonised regulatory environment.
“Regulatory simplification and harmonisation must focus on rules and procedures for defence procurement, intra-EU transfers of defence-related products, mutual recognition of national certification permits and permit granting. In addition, the impact on defence industry of EU non-defence policies and regulations needs to be reviewed”, the draft states.
The rationalisation of EU defence industrial programmes in order to reduce delivery times, simplify the management of EU-funded projects and simplify the treatment of Member State co-financing under State aid rules should also be addressed.
On the basis of a dialogue launched with the defence industry and the Member States, the Commission will present, by June, proposals in an ‘omnibus’ regulation dedicated to the simplification of the defence sector and in the next ‘White Paper on the Single Market’.
European preference. The Commission believes that the EU should consider introducing European preference in public procurement for strategic defence-related sectors and technologies, adding that “major industrial players from outside the EU often impose restrictions on access to their markets”. It therefore intends to introduce this principle of preference into the directive on public procurement in defence and security and to provide greater clarity on the conditions under which exclusions are applicable.
In the Commission’s view, a European solution should first be sought, followed by negotiations with European suppliers, possibly with EU support, to reduce prices and lead times while guaranteeing the required level of performance. For defence systems for which no European solution is available within the required price, time and performance limits, Member States should consider pooling and consolidating their demand with like-minded companies from third countries, while requiring full control, adds the Commission, which believes that in parallel, the EU should support the development of equivalent European technologies and capabilities.
Joint procurement. Member States are also invited to rapidly step up collaborative procurement, in line with the “at least 35%” target.
“Aggregating demand through EU incentives to Member States’ collaborative procurement can provide the necessary long-term investment signals and enhance demand predictability”, the Commission says. At the request of the Member States, the Commission could act as a central purchasing body on their behalf. “This option will also be available under the Reinforcement European Armament and Manufacturing (REARM) Instrument (...) to provide loans to Member States for collaborative defence procurement”, the text states.
Gaps. The Commission also wants to fill the critical gaps in Europe’s defence capabilities. In addition to the urgent measures and investments needed to replenish depleted stockpiles of military equipment and materiel in the Member States, the Commission states that large-scale pan-European flagship projects - which could be supported by EU-funded programmes - should be developed in the future to fill critical capability gaps in priority areas.
On the basis of the capability gaps already identified by the Member States, the White Paper defines seven areas of defence capability essential to the construction of a “robust” European defence: - air and missile defence; - artillery systems; - ammunition and missiles; - drones and counter-drone systems; - AI, quantum, cyber and electronic warfare; - strategic enablers, combat capabilities and critical infrastructure protection; - military mobility. On this last point, the Commission and the High Representative will examine the European legislation having an impact on this mobility and will consider appropriate corrective measures to remove persistent obstacles, announces the draft White Paper. By June, the Commission will also be proposing a strategy for transforming defence through AI and quantum computing.
Defence industry. The European Commission also intends to support the European defence industry, calling on the EU Council and Parliament to reach an agreement on the European Defence Industry Programme by the summer (see other news). It focuses on six strategic directions: - supporting, reinforcing and promoting industrial capacities throughout the EU; - securing the supply of critical industry inputs and reducing dependencies; - removing barriers to the circulation of defence products and services in the Single Market; - simplifying existing rules and slashing red tape; - boosting research and development to foster innovation; - and, promoting skills and expertise in the defence sector.
In addition, according to the document, translating Member States’ capability gaps into “qualitative and quantitative industrial targets”, possibly “as part of a multi-annual industrial production plan”, can improve the predictability of demand for industry, as well as confirmed and long-term orders.
Ukraine. Furthermore, taking the view that “the reconstruction of European defence begins in Ukraine”, the European Commission should call for an intensification of military aid and other forms of assistance to Kyiv. “Direct support to Ukraine’s defence industry is the most effective and efficient to support Ukraine’s military efforts, notably through direct procurement orders from its defence industry”, says the Commission, which also wants to integrate the Ukrainian defence industry into the European defence industry and involve Kyiv in EU initiatives to develop or acquire defence capacities.
Funding. Finally, “rebuilding European defence will require massive investment over a sustained period, both public and private”, says the document.
In addition to the new €150 billion REARM financial instrument, the coordinated activation of the National Escape Clause of the Stability and Growth Pact - which Member States are invited to request by April - and contributions from the European Investment Bank, the Commission is proposing to make the use of European instruments more flexible. With a view to mobilising private capital, the Commission has announced that, as part of the review of the European Sustainable Finance Disclosures Regulation (SFDR), it will consider defence as an investment goal in the sustainability framework.
To see the draft White Paper: https://aeur.eu/f/FXC (Original version in French by Camille-Cerise Gessant with Anne Damiani)